of a new stake in another thrift and then realizing a 72% return on a two- year-old investment on the long-awaited sale of Bankers First Corp. On Tuesday, Bankers First, the $1.1 billion-asset thrift company in Augusta, Ga., agreed to be acquired by SouthTrust Corp. of Birmingham, Ala., in a stock swap valued at $148 million. The sale, in the works for nearly six months after Mid-Atlantic forced the talks by winning a proxy fight last spring, translates into a $5.3 million gain for Mid-Atlantic. The news came just one day after Mid-Atlantic revealed in a Securities and Exchange Commission filing that it had found a new target - Palfed Inc., the Aiken, S.C., parent of Palmetto Federal Savings Bank. Mid-Atlantic's 9.3% stake, purchased for $5.1 million over a 10-day period in late October, makes it the largest shareholder of Palfed. "It's been a pleasantly busy week," said Jerry Shearer, managing partner of the Columbia, S.C.-based Mid-Atlantic, a general partnership that has instigated the prior sales of three thrifts in South Carolina in recent years. "We had been looking at Palfed for some time, and when their flat earnings came out, we saw the opportunity to make a move," he said. "Little did we know that Bankers First would finally close the same week." Analysts said the purchase price for Bankers First - valued at $28.29 a share, or 150% of book value - was favorable for SouthTrust. When the thrift company began considering offers last spring, many speculated it could fetch as high as $35 a share. The price issue may have prolonged negotiations through the fall, analysts said. But ultimately the high performance of SouthTrust's stock probably made the lower price more palatable for Bankers First, they said. "SouthTrust has been vehement about not diluting their own stock, and they can use that as a selling point in negotiations," said Michael L. Granger, analyst at New York's Fox-Pitt Kelton Inc. Mid-Atlantic first purchased stock in Bankers First in July of 1993, and subsequently built up its position to 9.9% over the next 16 months. Mr. Shearer waged a brutal proxy fight last spring that, among other things, forced management to consider offers to sell the company. Mr. Shearer now turns his attention to Palfed, located just 15 miles up the road from Bankers First. The dynamic market area in southwestern South Carolina is one of the factors that has drawn him to these institutions, he said. Plus, he said the thrift's third-quarter earnings could have been better. "We think we can offer management some suggestions on how they can improve those earnings," said Mr. Shearer. "I understand Mr. Troutman (chief executive of Palfed) has done a very capable job, but I'd like to meet with him and get his idea on where he believes the company is capable of going." Mr. Shearer will not be a passive investor in the Aiken thrift company, his SEC filing showed. He could pressure for board seats or eventually a "business combination," resorting to a proxy fight if necessary, according to the filing. "We know how they've operated in the past, and we expect it to be the same with us," said Mr. Troutman. "But we believe there is a place in the banking industry for independent banks and that they shouldn't necessarily go to the highest bidder."
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